Will Osborne pull rabbit out of the hat with 40p tax rate? Speculation over surprise give-away in 'steady as she goes' Budget

Speculation is mounting that the Chancellor of the Exchequer could pull a rabbit from his red box later today - with a front-runner possibility of a higher than expected increase to the 40p tax threshold.

George Osborne has promised ‘a Budget for a resilient economy' and aides stressed that despite the economic revival the package would be ‘steady as she goes’, in order to keep the public finances on track to balance the books by 2018.

He is expected to unveil a further rise in the personal allowance from £10,000 to £10,500 from next April, going beyond the promise made by the coalition in 2010. He is also sure to confirm increases to childcare tax-breaks flagged up at the weekend, among other measures to help those on lower and middle-incomes.

Chancellor George Osborne left Downing Street today amid a flurry of speculation over what he might have kept in reserve from a heavily-trailed Budget.

But expectation grew this morning that he has saved a surprise announcement to wow voters and Tory backbenchers, aided by upgraded growth forecasts from the Office for Budget Responsibility that could lower borrowing in the years ahead.

Among the strongest contenders is a hike in the level at which the 40p tax rate is paid. The Chancellor has been under increasing pressure in the last month from his own backbenchers who feat the party could be seen as not doing enough for their core vote.

They have called for the 40 per cent higher tax rate threshold be raised from its current level of £41,500 to around £44,000, arguing that below-inflation rises to the threshold have dragged millions more into the bracket.

Increases in the income tax threshold mean basic rate tax payers will be £800 better off in 2015-16 than in 2010.

One in six people in Britain now pay tax at the 40p rate compared to one in 20 when the tax was introduced in 1988.

Another dramatic move would be an increase in the National Insurance threshold to match the personal tax allowance - which would chime with Mr Osborne's longer-term aspiration of merging the two systems.

Others still have called for reform of the Stamp Duty thresholds which have also brought in millions more homeowners as house prices have rapidly accelerated.

The current Stamp Duty thresholds are 1 per cent for properties over £125,000 and under £250,000, 3 per cent for properties above £250,000 and 5 per cent for properties above £500,000.

Some have been calling for him to encourage employment by extending the £2,000 NI allowance for firms who take on staff.

After initially forecasting strong growth for the full five years of the coalition, the Office for Budget Responsibility downgraded its predictions for 2011 and 2012 but is now showing stronger growth fro 2014 onwards.

The Treasury has been given more room to manoeuvre by the stronger performance of economy over recent months, and the OBR will upgrade growth forecasts from the Autumn Statement.

But Mr Osborne has insisted he will not ease the government's long-running austerity programme - which has already seen the deadlien for a balancing of the books put back to 2018 - in order to fund major giveaways. He may also want some scope for a pre-election giveaway next year.

Labour leader Ed Miliband said voters should expect ‘a Tory Budget that claims our economy is fixed while families are £1,600 a year worse off’. Any significant action is likely to be seized on by Labour as evidence that the Conservatives are the party of the better-off.

Mr Osborne is also widely expected to maintain the freeze on fuel duty, and has also been under pressure to avoid increasing tax on wine and spirits - after scrapping the duty escalator on beer last year.

Ahead of the Budget, a survey today showed that the sense of financial wellbeing of British household’s dipped slightly in March but remained near its highest level for five years.

Markit's Household Finance Index for March slipped to 41.9 from February's 42.1, which had been the highest reading since the survey started five years ago, but the mood was still classed as pessimistic overall, with any reading below 50 representing a negative outlook.

There will be an eye-catching move to replace the existing pound coin with a thruppeny bit style design to tackle a rise in the numbers of fakes of the present version in circulation - estimated to be 45 million.

‘Today I will deliver a Budget for a resilient economy - starting with a resilient pound coin,’ Mr Osborne posted on Twitter along with a picture of the new design.

The Sun reported that tax on bingo halls will be cut from 20 per cent to 15 per cent in a bid to woo the game's legions of female fans.

Labour is unveiling a Budget poster in London and Birmingham today that will claim ‘hard-working people are £1,600 worse off with the Tories’. An image of the poster - featuring a nurse holding a red shopping bag with the slogan ‘We've all got budgets George’ - was posted on Twitter by Mr Miliband.

Cutting the tax on bingo will increase prizes and lead to investment in bingo halls, campaigners claim.

‘Today is going to see a contrast between a Conservative budget that claims our economy is fixed and family budgets that are £1,600 a year worse off since the general election,’ he said.

‘That's why the top priority for the Budget today has to be to tackle the cost of living crisis that so many millions of families are facing.

‘I hope we don't see complacency from the Chancellor today because so many families across the country are incredibly hard pressed, they're seeing their wages falling, they face 24 Tory tax rises since 2010.

‘What I hope we see from the Chancellor is understanding of the difficulties families are facing and a response to make life easier and better for them.’

Paul Johnson, director of the Institute for Fiscal Studies, told BBC Radio 4's Today programme: ‘The economy is getting a lot better now but it has been pretty bad for the last several years with the result that the Chancellor wanted the deficit essentially sorted by next year but actually it is not going to be until 2018.

‘He's set himself the task of getting down to zero borrowing by 2018 but we are still at over one hundred billion pounds so that's a long way still to go.’

He added: ‘If the Chancellor does have any tax cuts, and he may well do, he's going to be taking that back with his other hand, tax increases elsewhere or even deeper spending cuts.’

Last night business leaders said the Budget was a ‘make or break’ moment for the economy and and called on Mr Osborne to focus on investment and exports.

New coin: The replacement £1 coin alongside the current version and the old threepenny bit.

They welcomed the cut in corporation tax from 28 per cent under Labour to 20 per cent next year – but urged the Chancellor to do more to boost business investment and trade.

John Cridland, director-general of the CBI, said, ‘We need the Chancellor to use his Budget to support business investment and encourage firms to get on planes to sell their wares around the globe by getting behind our exporters. This Budget really is make or break.’

The British Chambers of Commerce said the focus should be on youth unemployment, training and enterprise to avoid a ‘lost generation’.

Director general John Longworth said: ‘Businesses tell me they want to hire young people. Yet many cannot afford to take the risk.

‘If the Chancellor wants to avoid a lost generation among today’s 16-to-24-year-olds, he must use the Budget to help businesses take on and train up young people, whether they are going straight into jobs or into apprenticeships.’

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Budget 2014: Will Osborne pull rabbit out of the hat with 40p tax rate?